European equity markets stable in quiet Christmas Eve deals

Sentiment has been hampered by the US fiscal cliff, according to dealers.

EUROPEAN EQUITY MARKETS steadied today in light Christmas Eve trade, with most investors away for the holidays, but sentiment was hampered by the impending US fiscal cliff, dealers said.

London’s benchmark FTSE 100 index of top shares gained just 0.24 per cent to end at 5,954.18 points, finishing early for Christmas. The Paris CAC 40 meanwhile dipped 0.24 per cent to close at 3,652.61. Frankfurt had shut early on Friday.

In foreign exchange activity, the euro advanced to $1.3219, up from $1.3181 late in New York on Friday. All three main European stock markets will remain closed on Tuesday and Wednesday, but will reopen for business on Thursday.

Fiscal cliff

With an end-of-year deadline just days away, sparring Washington politicians have yet to strike a compromise that could prevent a US “fiscal cliff” of automatic taxation hikes and spending cuts from taking effect on January 1.

Experts warn that going over the cliff could force the world’s biggest economy back into recession.

Before the weekend, Frankfurt’s DAX 30 stocks index fell 0.47 per cent to end at 7,636.23 points on Friday. Milan also finished early, with the FTSE Mib index dropping 0.40 per cent to 16,333.95 points.

Investors remain worried about debt-laden Italy after the nation’s Prime Minister Mario Monti resigned late last week after the Italian parliament passed a key budget vote.

The parliament was dissolved on Saturday, paving the way for general elections. Monti’s resignation ended a technocrat government that was brought in to save Italy from the eurozone debt crisis.

Across in Asia today, equities rose in quiet pre-Christmas trade after big losses in the previous session, as US lawmakers remain deadlocked in talks to avert the fiscal cliff.

With many markets open for just a half day, Hong Kong won 0.16 percent, Shanghai gained 0.27, Sydney added 0.25 percent and Seoul was flat.

Tokyo, Manila and Jakarta were closed for public holidays.

Wall Street

Wall Street had finished the week in positive territory, despite fiscal cliff turmoil, with traders poised to keep a close eye on the crisis during the final days of 2013.

New York markets were also due to shut early today and remain closed tomorrow, with action expected to be light in the coming days — especially since lawmakers are not due back in town until midweek.

Sentiment was hit after House Speaker John Boehner late Thursday scrapped a vote on a bill that would have extended tax cuts for all Americans earning less than $1 million even if a wider deal could not be struck.

The move, which he described as his “Plan B”, was dropped because he did not have enough support. He said his party would recess until after Christmas.

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